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On Thursday, UBS analyst Mauricio Serna adjusted the price target for Abercrombie & Fitch (NYSE:ANF) stock to $150.00, a decrease from the previous target of $210.00. Despite this change, the firm maintains a Buy rating on the company’s shares. Serna’s assessment suggests that Abercrombie & Fitch has fortified its standing in the U.S. Specialty Retail sector over the past five years. This conclusion is supported by robust sales figures reported in the fourth quarter, which indicate the company’s brands are outperforming competitors within the same retail category.
Following the Q4 earnings report, Abercrombie & Fitch’s stock experienced a 9% decline, a reaction attributed to growing concerns over margin pressures. Nevertheless, UBS remains optimistic about the company’s fundamental strengths. The firm projects a 10% five-year earnings per share (EPS) compound annual growth rate (CAGR) for Abercrombie & Fitch, suggesting that the growth potential is not fully recognized, given the stock’s current forward-year two price-to-earnings (P/E) ratio of 8 times.
UBS anticipates that Abercrombie & Fitch’s sustained growth will lead to an expansion of the P/E ratio to 11 times. This expansion is expected to drive the company’s stock price towards the newly set target of $150. The analyst’s commentary reflects confidence in the brand’s fundamentals and its ability to achieve significant growth in the coming years.
In other recent news, Abercrombie & Fitch reported its first-quarter 2025 earnings, surpassing expectations with an earnings per share (EPS) of $3.57, slightly above the forecast of $3.56. The company also exceeded revenue projections, reporting $1.58 billion compared to the anticipated $1.56 billion. Despite these positive results, Citi analyst Paul Lejeuz adjusted Abercrombie & Fitch’s stock price target to $135 from $160, maintaining a Buy rating. Lejeuz noted challenges such as elevated inventory levels and higher promotions impacting the first-quarter EBIT margin. Meanwhile, JPMorgan’s Matt Boss reduced the price target to $168 from $189, keeping an Overweight rating, highlighting the company’s expanded brand appeal and strong new customer acquisition. Jefferies analyst Corey Tarlowe also lowered the price target to $170 from $220, citing temporary challenges with inventory but maintaining a positive outlook on the stock’s potential. Abercrombie & Fitch forecasts a net sales growth of 3-5% for 2025, with plans to open approximately 100 new store experiences.
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